Stephan Bogner is mining analyst at Rockstone Research, he has independently analyzed capital markets and resource stocks for more than 11 years. He is also CEO at Elementum International AG of Switzerland trading precious metals and storing them in a high-security vaulting facility within the... More

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Stephan Bogner, mining analyst with Rockstone Research and CEO of Elementum International, views the crisis in Crimea as the beginning of a larger global power shift east of the Atlantic. In this interview withThe Mining Report, Bogner details what these shifting power dynamics will mean for the commodities market. And take heed-gold and silver may continue to make gains, but uranium, potash and rare earths are the true wave of the future.

The Mining Report: In his recent interview with The Gold Report,Robert Cohen said that now that Crimea has joined Russia, the crisis in Ukraine has run its course, which is why the price of gold has dropped. As a European mining analyst, do you agree with Cohen's assertion?

Stephan Bogner: In my view, high-level Wall Street players are orchestrating the gold price drop as a means of making people believe everything is in order again. They're attempting to convey that the crisis premium has been deducted from the gold price after its rise in the wake of the Crimea crisis, but I wouldn't bet on that.

Remember when gold rose from $300/ounce ($300/oz) to almost $400/oz in 2002-2003 due to the widely propagated Iraq War premium? When the war was over in early 2003, the price fell back to $320/oz. People used the same argument then: the gold price is dropping because the crisis is over. In a few months, the price rose to $500/oz for no reason the experts could explain.

TMR: What is the general sentiment among the Germans regarding the situation in Ukraine?

SB: According to large polls in Germany, most Germans think that not only Russia, but the Ukrainian government, the EU and the U.S. all have made mistakes and share the blame, and that the crisis is not our business and we shouldn't get too involved. One out of two Germans thinks that we should only use diplomatic measures and only every fourth German thinks that sanctions against Russia would be appropriate. That said, I doubt most Germans know what the full consequences that sanctions against Russia would bring us.

TMR: It seems the west is unwilling to do much to help Ukraine, apart from sanctions against Russia. Is this emblematic of a power shift from west to east?

SB: According to these polls, 75% of Germans distrust Putin and at the same time think that he is "clever and strong", but more than 60% of Germans doubt that Obama can solve this conflict. The traditional thinking that sees Russia as mainly negative and the U.S. as mainly positive is breaking apart. The NSA scandal and George W. Bush laid the foundation for the anti-American impulses that are on the sharp rise again. Vladimir Putin's power and influence have shifted the balance of power from west to east, although we are too proud to fully admit that.

European politicians should know that sanctions against Russia would be useless and counterproductive, to say the least. Germany and especially other European countries are far too dependent on Russian gas supplies and other commodities to threaten Russia with sanctions. We must acknowledge our fault in deciding to abandon all nuclear power plants in Germany, as we are now paying the price for our energy dependence. Putin must be doubling over with laughter about the proposed sanctions, because he's smart enough to understand that the threat of sanctions is merely chest-beating, as we attempt to convince our own citizens that we still have some influence.

Europe should try to get on the same page with Russia. I believe this can evolve to be a good thing, as Europe and Russia can become a happy new superpower, especially as we partner more with China. I rather want to see Europe team up with Russia and China to replace U.S. dollar-based transactions with what I envision as a gold-backed monetary system.

Russia can benefit immensely being strategically positioned in the heart of both and sitting on vast amounts of natural resources that can be fed to Europe and China. Ultimately, I see Russian, European and Chinese economies flourishing, while the U.S. inflates itself and becomes dependent on this new superpower.

I believe that Russia will successfully merge with Ukraine. I also believe that this crisis was the beginning of currency and commodity wars that may escalate. After years of depreciating commodity and gold prices, during which the smart accumulated as much as possible, the tide is turning and higher prices are on the forefront.

TMR: How will an alliance of this magnitude and the prospect of currency and commodity wars impact the U.S. economy?

It's no surprise that Stephan Bogner, analyst with Rockstone Research Ltd. and CEO of Elementum International - a precious metals trading and storage firm - advises investors to hold physical metals outside the banking system, but he also advocates mining companies keeping gold on their balance sheets and forming a cartel.

In this interview with The Gold Report, Bogner discusses which exploration and development companies will be ready to produce when metals prices rise and shares his interest in the diamond, potash and uranium space.

People are increasingly looking for alternatives to banks. Independent vaults offer exactly that. Instead of holding your cash in a bank account, you can buy gold and silver and store it in an independent vault outside the banking system. My firm, Elementum International, stores precious metals in a high-security facility inside a mountain in central Switzerland. Our clients can sell the metals to us at any time if they need cash. That is banking backed by real values.

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I think China will back its currency with gold or somehow utilize gold as a monetary asset once gold prices have started to rise toward $2,000/ounce ($2,000/oz) and/or once there is nothing left to purchase from a dried-up physical market. Russia may very well do so, too. There is no other solution to the growing financial excesses but inflation, so investors have got to go for gold. Follow the smart/quiet money and not the dumb/noisy money.

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As soon as a company mines gold or silver, it sells it into the market and trades it for dollars. Instead, the company should use gold and silver as the functional currency for the industry. I'm certain that most companies would participate if such a system was in place. Companies should look for ways to bank their gold as cash assets or take out gold loans, not dollar loans. They should buy physical gold and silver and store it outside the banking system. When they require cash, they can sell part of their holdings.

Many exploration, development and producing companies have millions of dollars of cash in the bank. If they all bought bullion and stored it in an independent vault facility outside the banking system, that would put upward pressure on the price, which would benefit the companies.

Such a system is already in place and it is only a matter of time until mining companies will hold their cash in gold and silver. Shareholders will appreciate such prudent companies that know how to play a depressed market for the benefit of the shareholders. This also would bring a lot of credibility and investor confidence back into this dried-up market.

There are oil and potash cartels; the gold industry should come up with something similar.

Each year, European investors in the resource markets find an increase of activity in November. Two events bring participants in mineral exploration and mining together; the Edelmetall- & Rohstoff-Messe (Precious Metals & Commodities Show) in Munich, and the Zimtu Road-Trip.

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Long queues at 2012 Edelmetallmesse in Munich's Olympiapark

The Edelmetallmesse is Europe's largest gold and mineral resource show which attracts a significant number of investors, analysts and letter writers. A unique characteristic of the show is the near frenzy of people lining up to buy physical gold and silver. This show has attracted prominent international financial personalities including Eric Sprott, Marc Faber, James Turk, David Morgan, Johann A. Saiger, Prof. Dr. Hans Bocker, Thorsten Schulte, Dimitri Speck, and Lawrence Roulston, just to name a few. Exhibiting companies include the likes of Aurcana Corporation (TSXv: AUN), Colt Resources Inc. (TSXv: GTP), First Majestic Silver Corp. (TSX: FR), Zimtu Capital Corp. (TSXv: ZC), Focus Graphite Inc. (TSXV: FMS), Monument Mining (TSXv: MMY), Premier Gold Mines Limited (TSX: PG) and Western Potash (TSX: WPX).

Among the Edelmetallmesse exhibitors will be a group of at least seven junior explorers at a booth hosted by Zimtu Capital, a project generator that maintains holdings in companies ranging from early to advanced-stage and covering a number of commodities. The Edelmetallmesse will be the first stop on the Zimtu Road-Trip.

The Zimtu Road-Trip is the annual event which brings mining executives and investors together in various European cities, and which begins this year in Munich and then makes stops in Geneva and Zurich.

This year Zimtu Capital has added workshops to its events which will bring industry experts together with investors in a more intimate setting. One of these workshops will focus on uranium and will feature the President of Dahrouge Geological, Jody Dahrouge who was a member of the teams behind two of the four major discoveries in the Athabasca Basin. Another of the workshops will feature the specialty metals expert Simon Moores of Industrial Minerals.

In addition, Chris Berry of House Mountain Partners, a featured presenter at the Edellmetallmesse, will be on the Zimtu Road-Trip and will be speaking about his perspectives on Value Investing.

For more information on the Zimtu RoadTrip in Zurich, please click here.

For more information on the Zimtu RoadTrip in Geneva, please click here.

For more information on the Edelmetallmesse in Munich, please click here.

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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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